Qantas grounds entire fleet over dispute

Melbourne, October 29, 2011

Australia's Qantas Airways said on Saturday it was grounding all aircraft over a labor dispute, a move that would cost it A$20 million ($21.4 million) a day.

The airline said in a statement that from Monday evening it would lock out all employees over a protracted industrial dispute with the engineers association, pilots, catering and ground handling associations.

An extended grounding would benefit domestic rival Virgin Australia and others such as Singapore Airlines, British Airways and Chinese carriers on international routes.

'First, these three unions are sticking by impossible claims that are not just to do with pay, but also to do with unions trying to dictate how we run our business,' Qantas chief executive Alan Joyce said in a statement.

'They are trashing our strategy and our brand. They are deliberately destabilizing the company. Customers are now fleeing from us.'

The unions have taken strike action since September over pay and opposing Qantas plans to cut soaring costs.

The strike is the worst dispute the airline has faced since 2008, when industrial action by engineers cost it A$130 million ($133 million), according to local media.

Key high value domestic bookings on east coast routes are down by a quarter. November international bookings have fallen nearly 10 percent, Joyce said.

The airline said the financial impact to date has reached A$68 million and the action is costing Qantas approximately A$15 million per week in lost revenue.

It is looking at setting up two new airlines in Asia. It plans to cut 1,000 jobs and order $9 billion of new Airbus aircraft as part of a make over to salvage the loss making international business.

Approximately 70,000 passengers have been affected and more than 600 flights canceled.

Aircraft currently in the air would complete the sectors they are operating. However, there will be no further Qantas domestic or international departures anywhere in the world, it said.-Reuters